Be careful investing in the TSX (or Canada in general) as long as China-loving Carney is in power. Politics remains Canada's biggest threat, not the poor economy. In our case, the latter is a result of the first. Our economy is dependent on the U.S. and now that Carney has a majority government, he can continue to ignore this fact. One day he will learn that due to geography, no other group of countries will ever replace U.S. demand for our goods. Until voters wake up to the fact that Carney’s "New World Order" will result in economic suicide, Canadians will continue to experience a decline in their standard of living.
Job losses are increasing. The Elbows-up crowd boasts how Carney is creating employment after March saw an increase of 14,100 jobs. The increase was driven by a rise in part-time work, which offset a decline in full-time positions. Of course, it is the trend that matters, and these added jobs have done nothing to make up for the 109,000 lost jobs between January and March.
Mortgages are resetting at higher rates. After renewing my mortgage last month, the interest cost increased by $3900 per year. This is the minimum the average mortgage payment will increase across Canada over the next two years. The amount is equivalent to half a years worth of car lease payments for the over-leveraged wannabe rich folk, more than half of a years TFSA contribution, daycare and sports for the kids, or the average family's entertainment budget. My wife and I have great credit and zero debt, so I can only imagine what most homeowners are facing upon renewal in Ontario and B.C. where the average mortgage is over $450k. Clearly, the economy is going to take a hit.
While Canadian banks have amongst the highest capital ratios in the world, this sector of the TSX is not immune to a correction. Home prices are dropping and will continue to until investment properties can generate a positive cash flow that is competitive with dividend yields. Only if one put down a 50% downpayment or purchased years ago, investing in real estate today will require you to cover costs out-of-pocket. It is reasonable to expect prices to fall another 30% from today’s levels. I would take some gains in Canadian bank stocks if you want to swing trade or will need the money over then next two years. I recently sold 75% of my holdings in Bank of Nova Scotia and will repurchase the shares when I recommend to in the “Portfolio” section.
Another threat to the TSX is a correction in the metals and oil market. Oil and many metals are trading at or near historical highs. This results in abnormal high profits and climbing share prices. Like the banks, these shares will be cheaper in the future.
Even if the economy was the strongest in history, the stock markets would still be in expensive territory. The average price-earnings ratio (P/E) on the TSX continues to move higher and is trading at over 22 times earnings versus the norm of round 15 since 1954. This means investors expect corporate profits will double in 3.2 years. There is not a chance this will happen. Where are consumers going to get the money when most are debt rich and savings poor?
The U.S. markets are even more expensive. Based on the Case-Shiller P/E which uses a ten-year average, the S&P 500 is trading at the second highest level in history. Similarly, the Buffett Indicator, also known as the Market Capitalization-to-GDP ratio, measures the value of all stocks in a country compared to its GDP. In the case of the United States, this metric is trading at 213% which is alarming when you consider 150% has proven over valuation since sell offs usually followed after this level was hit. It is not surprising that Berkshire Hathaway is sitting on the most cash in the company’s history.
By the end of this year governments and consumers will be battling each other trying to borrow money to keep afloat. We expect interest rates to be cut next month, then begin a period of multiple increases over a few years due to demand. Rising interest rates always force down stock markets until dividend yields become competitive with bonds.
Continue to buy one-year insured GICs. If you wish to lock in capital gains, doing it now will prove to be a smart decision two years out. Carney is doing everything in his power to destroy Canada. He only cares about Brookfield and looks down at the average citizen. He has 3% of his wealth invested in Canada, has not lived in the country for nearly twenty years, and will leave as soon as he is ousted as PM. And upon his departure, he will look around at the many pieces he broke the country into and think to himself “who cares”.
Canada has the best prospects in the world. No other country can match what we have. We are rich in mining, energy, farmland, forests, have an above average educational system, and lots of fresh water, the most critical compound on the planet. Let us hope Carney voters wake up and learn that we have to take advantage of our potential. Hold off on entering the stock market until valuations return to normal.
Wednesday, April 29, 2026 at 6:52AM 
